Geothermal energy development in Kenya, Lessons for Uganda-2013.

Monday, September 30th, 2013

Geothermal energy development in Kenya, Lessons for Uganda-2013.

Recently the media reported that government had signed a power purchase agreement with a major American infrastructure firm AAE systems that will take on a $1.2 billion, 150Mw, geothermal power plant in Kasese district .It is commendable that government is taking such a huge stride in trying to meet the electricity needs of Ugandans.

Such developments are needed for the country to fully exploit the existing geothermal potential estimated at 450MW (Renewable Energy policy 2007). Aside from the proposed Katwe Geothermal Power Project, another remaining 300 MW could be developed at Buranga-kabale district, and Kibiro-Hoima district.

Ranked 10 on the list of the 24 global producers of geothermal technology, Kenya is the leading producer of geothermal energy in Africa. In 2010, geothermal energy accounted for almost 20% of Kenya’s total electricity generation, all coming from the rich reservoirs of Olkaria I, II, III and IV. Currently Kenya generates over 200mw from geothermal technology. An additional 512MW is forecast to be added to the Kenyan Grid by 2020.

To achieve this, the Kenyan government has had to undertake several Institutional and Policy reforms geared towards promoting geothermal energy development. At Institutional level, Geothermal Development Company (GDC), a semi-autonomous state-owned company, was established and charged with financial risk mitigation, appraisal and production drilling in the early stages of geothermal exploration and development.

GDC also works with domestic and international financial institutions to underwrite and spread risk through Joint Ventures with investors. Deterrent capital investment risks associated with this technology have been assumed by the government’s investment in exploration and feasibility studies as an assurance to potential investors.

A 20-year feed-in tariff policy benefits all the Independent Power Producers (IPPs) generating power not exceeding 70 MW this acts as a market incentive.

The above highlighted bold policy initiatives continue to attract both domestic and foreign investment into the country’s geothermal resource sector in Kenya.

Uganda is on the brink of yet another load shedding roaster due to electricity demand outpacing supply, while the procurement standoff between the IGGs office and Ministry of Energy and Mineral Development continues to delay the development of Karuma Power Project, cloning the Kenyan success story in geothermal technology would be a welcome relief to Ugandan electricity consumers.

Unlike hydropower, the technology is not affected by drought and climatic changes, it is green and clean energy with almost no adverse effects on the environment with less carbon emissions compared to fossil fuel technology and has predictable low operational and management (O&M) costs compared to other forms of renewable technology.

By addressing the existing bottlenecks to the development of geothermal technology which include lack of a geothermal policy and Act, inadequate funding for the initial ground surface works and a non existing skilled manpower in the sector, will be a precursor to attracting more investment into the sector.

In a country where the electrification rate is only 12% for the whole country and 6 % for rural areas, the katwe geothermal project will enable substantial increase in the provision of additional reliable and clean power generation capacity to Ugandan households, businesses and industries. This in turn will also improve electricity coverage in Uganda, which is still one of the lowest in Africa.

Diana Taremwa

Africa Institute for Energy Governance